Remodeling Soars In Popularity--with New And Old Home Owners

Home builders are being attracted in increasing numbers to remodeling, an ancillary industry that is gaining stature through its new recruits and the tremendous volume of business they are doing.

Remodeling is becoming more popular because it provides builders--who previously stuck to new single- or multifamily construction--some protection from the cyclical nature of the housing industry.

But remodeling is also becoming more popular because the demand for such work, by old and new home owners alike, has soared in recent years.

``Every year, the remodeling business just gets bigger and bigger,`` said Edward McGowan, a Binghamton, N.Y., builder and chairman of the National Remodelers Council. ``And I believe it is going to get even stronger because the new tax law is going to be a benefit for our industry.``

The remodeling business in the United States encompasses a vast array of jobs, from $100 do-it-yourself floor tiling to $100,000 house additions. It is so difficult to classify that of the $80 billion in remodeling done in 1985, the government lumped $42 billion in the category of ``other.``

But it is estimated that by 1991, the housing dollars spent on remodeling and rehabilitation will exceed the dollars spent on new construction in this country for the first time.

The numbers have grown so large that the National Association of Home Builders is compiling a profile of the remodeling industry, based on interviews with its members, in order to better serve the emerging builder/

remodeler trade.

``As household growth slows, new construction will diminish. But remodeling will be a continuing strength,`` said Bill Apgar, director of the housing future program at the Harvard-MIT Joint Center for Housing Studies.

The remodeling industry has shown about a 15 percent growth rate every year this decade, Apgar said, indicating that the strength is coming from a variety of sources.

``Some people argue that when interest rates are high, it makes it too hard to move. Since people are stuck, they tend to fix up their exisiting units,`` he said. ``Another argument is just the opposite: that as rates go down and there is a lot of refinancing, money just goes right back into the home.``

``A lot of the growth is related to the sale of new homes. As the trade-up market increased, there was a growth in remodeling from people fixing up their home for sale or from customizing their move-up house after they were in it,`` he said.

``But, whether households moved or stayed put, they were growing and were finding themselves with more income,`` he said.

Apgar said that the most growth in the remodeling market has been in the multifamily rental sector, which has accounted for about a third of the increase in remodeling business this decade.

``Builders are seeing an increase in the amount of work they do for owners of apartment complexes. So many new projects have been built in many parts of the country that the only defense the owner of an existing property has is to spruce up to maintain rentals,`` he said.

In 1985, Apgar said, $18 billion was spent on routine apartment repair and maintenance, including things like new roofing and siding. That equaled the amount spent on the same routine repairs to single-family houses.

Surprisingly, people who have lived in their homes for four years or less spend about 50 percent more on remodeling than people who have lived in their homes longer than that. Many people who bought houses in the fast-paced market of the last three years have more remodeling to do.

But they are paying others to do it--and paying well. According to NAHB statistics, the average price is $9,000 for a basement remodeling project, $11,000 for the kitchen, $13,000 for the bath and $20,000 for a room addition. ``The country`s longstanding love affair with do-it-yourself may be slowing,`` said Eliot Sefrin, editor of the Kitchen and Bath Design News.

``We`re seeing more and more gains to professional builders and remodelers.``

``Especially the kitchen and bath market, which accounts for a considerable percentage of the overall remodeling market, is maturing`` he said. ``It was only a brief time ago that designing kitchens and baths was trial and error. There`s a new level of professionalism among kitchen and bath specialists today and a growing consumer awareness is what is driving the market.``

Sefrin predicted 6 million new kitchens and 7.3 million new baths will be constructed nationwide this year, with about 4.4 million of each being built by remodelers. This forecast translates into an average of 73 kitchen and 45 bath jobs per remodeling firm, up from 55 and 33 respectively last year.

``The big-ticket items have gone up sharply in the last few years, and that is driving the business of many builders,`` Apgar said. ``A larger share of the market is discretionary spending, like the 500-square-foot bath with Jacuzzi.``